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Battle of forms: do your terms and conditions apply to your contracts?

View profile for Steven Grant
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Two companies who went to court in an argument over whose terms and conditions applied to a contract between them, have both lost out.  Steven Grant, Head of the Commercial Team, explains more about the case here, and why the High Court decided that neither company had a leg to stand on in their dispute over the supply of rubber gaskets.

The dispute arose between Transformers & Rectifiers Ltd and Needs Ltd.  Needs argued that its terms and conditions applied to the sale of the gaskets, so that its liability for breach was limited to the contract sum, but Transformers & Rectifiers said that its terms and conditions applied because they were printed on the back of the purchase orders.

The commercial relationship had been going on for more than 20 years and orders were placed for the gaskets and other components every week by fax, e-mail and sometimes by post.  What was important was that the terms were printed in a pale typeface on the reverse of the purchase order with no reference to them on the face of the purchase order.  When the orders were faxed or emailed, the reverse side was not included in the transmission.

Similarly, Needs referred to their standard terms and conditions in their order acknowledgement, but did not provide a copy of them or print them on the reverse.  As a result, both companies failed to have their terms and conditions upheld in deciding the contract, with the High Court saying that neither party’s terms and conditions were sufficiently incorporated into the purchase process.

This ruling highlights the importance of making sure that if you want to be able to rely on your terms, then you must state clearly that you are purchasing or providing the goods or services on your terms.  Also, the terms need to be supplied each time or be readily available – these days it could be a link to the document on your website.

So, for example, the order acknowledgement could say “Our standard terms of business shall apply, click here to read our standard terms” – the important thing is to be clear and be consistent and that they are kept up-to-date.

There are many questions surrounding terms of business including whether you need different terms for consumers and businesses, what risks you need to limit, if you need different terms for your website and if you trade internationally which country’s laws apply and where will any dispute be adjudicated.  For more information or advice on your terms of business, you can contact Steven or the Commercial team on 02380 717717 or visit their section of the website here.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.